As the Dragon Boat Festival approaches in China on June 1, 2014, the market has entered a new luminaire discount season, according to a report by Chinese-language media Kyushu Building Network. Top luminaire brands have all increased prices because of rising raw material and logistic costs. However, since lighting products are not daily commodities most consumers have been less sensitive towards incremental price increases. Some industry experts project prices will be up as much as 10 percent next year.

“Our company plans to raise product prices by about 15 percent by the end of this month,” said a sales of a well-known luminaire brand in China. The source also pointed out the company tends to adjust prices at the end of each year. Although, many manufacturers in China launched discount promotions ahead of the Dragon Boat Festival, some new products prices still cost five to 20 percent more than old models.

Another industry source that declined to be named, told Kyushu Building Network the company had to raise product prices because of costs and company’s market position. In addition, raw materials and logistic costs have all increased.

According to Chinese LED industry insiders, intense market competition has spurred the luminaire market into a low profit phase. The luminaire industry’s days of high profit are over. “Up to 20 percent of the industry’s income goes into shop rental fees, seven percent to logistic companies, which brings the average luminaire manufacturer’s profit to 10 to 20 percent,” said an industry source. “It will be difficult for manufacturers to further lower prices. The overall market has been raising prices since the end of 2013, and prices are expected to grow 10 to 15 percent.”

Industry insiders: price rise reasonable

Some Chinese luminaire industry experts analyzed that manufacturing costs on average would increase above 10 percent next year. However, manufacturers are expected to absorb some of the costs by lowering gross profit margin, increasing material usage, using more machines to lower single unit costs, and reducing manpower. These experts also projected luminaire prices will be up 10 percent in 2014, and think the increase range is reasonable.

Chinese luminaire industry insiders reminded new products are often launched on the market after the Dragon Boat Festival. Price increases in new products are often more acceptable to consumers than existing products.

[Editorial Note: The industry sources cited were not clarified in the original report.]